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Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub-zero, albeit briefly and in somewhat freakish circumstances. Where are the signs of stress across the oil value chain? And what are the prospects of finding an exit route to recovery? I talked it through with Ann-Louise Hittle of our Macro Oils team.
First, oil demand, which we think may be close to bottoming out. Decline has been sharp and deep as Covid-19 takes its toll on global economic activity. Much of the world is currently in lockdown, with more than 65% of the world’s population under travel restrictions. Global air travel and car use have nosedived in many countries. The big hit has been on jet fuel demand (down 50% year-on-year) and gasoline (down 25%). Diesel and fuel oil – used to transport goods by truck, ship and rail – have held relatively steady.
The net effect will be April’s demand falling by an average of 15 million to 18 million b/d year on year, based on the early April forecast from our Macro Oils Service. It’s a big number but may be bigger still on certain days or weeks in April and May. Some estimates have suggested declines of 20 million b/d or more.
A key question is when the global economic recovery that’s needed to kick start oil demand growth again will begin. Right now, we appear to be in limbo. India, France and the UK, among other big economies, have extended lockdowns into May. Italy, Spain, Austria and others have started to ease restrictions while several US states are considering re-opening in May. There are early signs of US gasoline demand stabilising.
China though is the model to watch as it emerges from lockdown. It has already started ratcheting up crude purchases in April to supply a reviving economy.
Second, inventory is building at superfast rates globally. Cushing, Oklahoma, is a microcosm of the wider picture. Oil prices in Texas have incentivised producers to send crude to the Cushing hub; weak demand from refineries in the Mid-West and Gulf Coast have kept it there. Storage tanks are filling up rapidly – the three largest weekly builds on record were in consecutive weeks from late March, based on Genscape’s proprietary twice-weekly tank monitoring.
Cushing’s tightening storage capacity played a central role in WTI’s ignominious dive into negative prices on 20 April, ahead of the May contract expiry. Traders and financial players were effectively ambushed – having to pay counterparties up to US$37/bbl to roll out of their expiring May contracts and into June.
Storage globally will stay tight so long as oversupply persists. Genscape estimates Cushing‘s spare capacity of up to 15 million b/d will be full within weeks, and other landlocked hubs – the Caspian for one – are in a similar position. But in reality, producers everywhere are worried their crude won’t be able to find a home.
Third, the world is still awash with supply, which unlike demand is still close to pre-crisis levels. Low prices have killed off new investment but have not yet had much impact on production. So far, we estimate barely one million b/d of onstream non-OPEC production has been shut in.
These are sizeable volumes but, given the scale of the market oversupply, insignificant. We estimate over 15 million b/d of production generates negative operating cash flow, now that prices have lurched lower. As storage fills up, more wells and fields will be shut-in during the coming weeks. Curtailed volumes will quickly mount up.
What must happen for the oil market to start rebalancing and prices to recover? May is important for supply, with OPEC+ cuts taking effect and removing up to 7 million b/d from the market by the end of the month. We expect a slow return to “normal” life in H2 2020 to help demand recover, though most likely staying below pre-crisis levels.
A strong bounce in demand as the world emerges from recession will be needed to soak up the overhang of inventory, which threatens to reach record levels by summer. Nothing, however, can be taken for granted while coronavirus still poses a threat to economic – and social – activity.
Source: Wood Mackenzie
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Friday, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 25 March 20
CORONAVIRUS CRISIS IS CRUSHING GLOBAL GDP GROWTH - FITCH RATINGS
The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly “Global Economic Outlook” (GEO) ...
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- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
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